BOOKS J I \ ,fl L l l1Î --- 72 -4 COMPANY MAN Once Tom Peters redefined the American corporation. Now he wants to destroy it. BY JAMES SU R.OW I ECKI I N 1974, the Motorola Corporation decided that it needed to get out of the television business The plant where its TV sets were made was in every sense a failure: it lost money, it was full of unhappy workers (a third of them quit each year), and it turned out products that spent more time in repair shops than in people's homes. For every hundred televi- sion sets Motorola made, it found a hun- dred and forty defects. Seventy per cent of the people who bought TVs from Mo- torola filed complaints about how bad they were. And the company was spend- ing a fortune on warranty service. So Motorola sold the plant to the Japanese electronics giant Matsushita. Matsushita eliminated a third of the plant managers, turned supervisors into assembly-line workers, and gathered workers in teams each week to talk about improving production. Five years later, just seven per cent of customers com- plained, just one out of every hundred workers quit each year, and warranty costs plunged. The number of defects per hundred television sets? Six. This is a story that was told and re- told by American writers in the early eighties, because it seemed to sayevery- thing about the disaster that had hit American corporations in the previous decade. For twenty-five years after the Second World War, corporations here reaped the benefits of American hege- mony over the global marketplace. But uncontested domination turned out to be poor preparation for real competition. By the early seventies, Japanese and West German companies were introducing better products faster, and were paying much more attention to what consumers really wanted. American corporations, by contrast, found themselves stuck with elaborate managerial hierarchies that were geared mostly toward producing thick reports, while twenty-five years of selling to captive customers had made corporations scornful of consumer de- sires and unconcerned about quality: The nineteen-seventies saw corporate profits, market share, and productivity growth go into free fall. By the end of the decade, both Chrysler and Lockheed had to be bailed out by the government, and Ford looked as if it might be next. "In Search of Excellence" arrived upon this desolate scene like a Candygram at an intensive-care unit. The book cheer- fully sorted through the rubble of Amer- ican industry to pluck out those com- panies which were still doing things right, and then tried to explain what was right about what they were doing. Pub- lished in 1982, "In Search of Excel- lence," which Tom Peters wrote with Bob Waterman, became the most im- portant business book of the decade. It sold more than four million copies, spent half a year at the top of the Times nonfiction list, and may well have played a major role in putting the pieces of American industry back together. It also catapulted Peters, a former consultant at McKinsey with a Ph.D. in business from Stanford, into a career as a man- agement guru. Peters, whose seventh and la est book, "The Circle of Innova- tion" (Knopf; $30), is a picture-text hy- brid reminiscent of the late work of Marshall McLuhan, has become a fig- ure easy to lampoon, given to posing for book covers in boxer shorts while offer- ing up plans to destroy the corporation as an entity. And yet his work over the last decade and a half has both shaped and been shaped by the most signifi- cant trends in American business. In no small part, what American corporations have become is what Peters has encour- aged them to be. In the late seventies, when Peters be- gan writing, inflation and interest rates had skyrocketed. Labor unions were rela- tively strong, and foreign competition was more intense than it had ever been. And yet nearly everyone who looked at the cri- sis of American business understood it to be a crisis of management. We were, in an often repeated formula, "managing our way to economic decline." Under the im- perative to diversify, corporations had be- come a grab bag of holdings, with Mobil Oil going into the department-store busi- ness and Exxon going into telecommuni- cations. Management hierarchies had be- come hugely overstaffed: by 1980, there were more than fifteen levels separating the chairman of Ford from a factory-floor supervisor. (At Toyota, there were just five.) Workers had become apathetic, feeling little loyalty to their companies and little engagement with their jobs. These problems were intimately in- terconnected. Executives running a hun- dred different businesses were unlikely to know anything specific about anyone of them, which made it important to have extra layers of people who did. And all those layers of middle managers needed to justify their existence, which made them uncomfortable with initiative from blue-collar workers. Finally, it was hard for those workers to care about their work when their bosses seemed to be mainly finance guys who wanted to buy companies, not build cars or TV sets. If you were trying to :fix America's dysfunctional corporations, Japan was an obvious place to look for ideas. But although the way Japanese car compa- nies gathered workers in small groups to talk about quality improvements was a pretty good illustration of what worker involvement meant, the picture of Jap- anese workers singing company songs struck most Americans as vaguely creepy. One of the things that distinguished "In Search of Excellence" was that it focussed almost exclusively on Ameri- can firms. "The findings from the excel- lent companies amount to an upbeat message," Peters and Waterman wrote. "There is good news from America." In other words, you did not need to imitate the Toyota Production System or have your workers take naps during their breaks in order to succeed Home- grown models could be found at compa- nies like Hewlett-Packard, Procter & Gamble, and 3M. "In Search of Excellence" was also => notable for the seeming simplicity of its advice. As Peters and Waterman